capital efficiency

The new AMM will feature four customizable pool options and offer significant capital efficiency for depositors.

After months of bluster and braggadocio, decentralized finance (DeFi) platform Sushi is finally revealing the long-awaited “7/20” project update — but it remains to be seen whether the new product will live up to the hype. 

Taking the stage this morning at the Ethereum Community Conference in Paris, Sushi CTO Joseph Delong pulled back the curtain on a new hybrid automated market maker (AMM) called Trident.

Trident will feature four AMM models, including constant product pools similar to the current SushiSwap, hybrid pools similar to Curve that allow for the efficient exchange of like-kind assets such as stablecoins, concentrated liquidity pools similar to the functionality Uniswap v3 offers, and weighted pools similar those available through Balancer.

The Summer of $SUSHI is upon us, a dawn of a new season. The scent of Shoyu, Miso, and Mirin waft through the air.

What surprises do the chefs have in store for us?

We shall find out soon enough...

I'm now the proud owner of "7/20/2021" an EPIC teaser by @X_x_Y_x_X pic.twitter.com/1Hd3dwh02l

— BΞN (@__DeFi__) June 18, 2021

Trades on the new platform will work through Tines, a new order-matching engine that will examine all four pool types for the most efficient swaps. New and uncommon tools include limit orders and the ability for pool deployers to save gas by disabling time-weighted average price oracles in lieu of Chainlink oracles. Additionally, all four AMMs are built on Sushi’s BentoBox fractional reserve platform, meaning that unused liquidity will earn additional yield via lending strategies.

Finally, after the launch of Trident, Sushi has “franchise pools” in its roadmap — specialized pools designed to cater to Know Your Customer/Anti-Money Laundering needs for exchanges and other institutional users, potentially a compliment to Aave’s forthcoming institutional lending pools.

In an exclusive interview with Cointelegraph, Delong said that while there’s no set date for the launch of Trident, users can expect the launch to be “more than 30 days post-7/20, but less than 60.”

While Sushi is a former fork of Uniswap, the team isn’t short on confidence in its development chops. In early Trident documentation drafts provided to Cointelegraph, the team claims that the most extensive post-fork product it has brought to market yet “will be the most capital-efficient AMM in existence at launch.”

“This is the place to do it”

Though critics may point out that all of Trident’s AMM models have been theorized and even built before, Delong was quick to note that Trident’s implementations are complete ground-up code rewrites. 

The team started with Andre Cronje’s Deriswap as “a base to build off of,” though it eschewed Cronje’s notion to utilize unused pool liquidity for options writing in favor of safer strategies. Likewise, LevX brought early models for the hybrid pools with its work on Mirin — a pair of starting points that led to the four-model hybrid.

Where new and existing AMMs can currently go to market only offering one AMM model, Delong notes that building a platform that can accommodate a range of assets is key to attracting liquidity from across the ecosystem.

“The real design for this implementation is that certain tokens excel with certain AMM types. Long-tail shitcoins excel with constant-product pools. Like-kind assets excel at the hybrid swap. Blue chips do really well with concentrated liquidity positions. That’s all nice, but the thing that really ties it all together is our new routing engine, Tines.” 

Tines takes into consideration both gas fees and liquidity and is capable of going both “horizontal” and “vertical” when routing — what Delong calls “multi-route and multi-hop.” Multi-route is similar to 1inch, where the routing engine moves through multiple pools to mitigate diminishing returns, and multi-hop refers to bouncing between assets in order to achieve the same. 

In addition to casting a wide net to attract traders, Trident will offer liquidity providers attractive incentives. Trident is a “native application” to the BentoBox base layer, a large, aggregated pool where upward of 80% of deposited tokens can be used in yield-bearing strategies rather than sitting unused. Delong notes that even liquidity used for limit orders will be able to sit bearing yield as traders wait for their set prices to arrive.

Currently, the team only has a Compound deposit strategy, but it’s prospecting other options, and Delong made it clear that the company is open to hiring on that front, as it’s shortly about to have $2 billion in total value locked that can be put to work.

All that matters now is our response - see you on the other side of 7/20 pic.twitter.com/bUJDqrjRqn

— Joseph Delong (@josephdelong) July 1, 2021

Delong also noted that Trident’s UI/UX for providing liquidity “will seem obvious in hindsight” and that liquidity provider positions will be represented as ERC-1155s as opposed to ERC-721s, which the team hopes will add a degree of fungibility to the positions and make trading them on secondary markets easier.

When asked who Trident will most appeal to, Delong said that “anyone with idle capital” will benefit from Trident’s capital efficiency.

“Any application that has tokens that sit dormant, like Sablier — wouldn’t it be great if those tokens that sit in Sablier could be used in strategies? If you want to raise the capital efficiency of anything that you’re doing, this is the place to do it.”

Forks and fundamentals

Trident and Tines, as names, are no accidents and, in fact, might be seen as an attempt to appropriate the “fork” label and turn it into something more powerful, said Delong. 

“The Trident name comes from Cobie, when we were talking about being a fork,” he told Cointelegraph. “That’s what most people say about us. That’s kind of a hard moniker to shake… it feels like graduation day in a way.”

A trident is a fork too if you think about it

— ∞ CO฿IE (@CryptoCobain) June 6, 2021

He celebrates “taking on the mantle” as a leading AMM, relishing in the challenges of the team being forced to make its own design decisions, facing gas efficiency tradeoffs and laying the groundwork for more development in the future.

Still, detractors might point out that, for all of the optimizations, Trident remains a kind of fork in spirit; aside from a handful of features, there’s nothing truly new.

“That worries me,” he said. “I know what we built, and I know we built the best system that’s out there. But that does worry me.”

He noted, however, that while wholly new innovations “have yet to be built,” BentoBox and Trident are flexible enough to accommodate them — but first, “we have to ship,” he joked.

What’s more, the former fork embraces similar competition. Instead of trying to safeguard its products with business source licensing of questionable enforceability, Sushi has opted to open the entirety of Trident and Tines via GPL3, which Delong refers to as one of the “very permissive licenses that symbolizes the gold standard in open source.”

The license is an invitation to challenge them, said Delong.

“Fork us. Have fun. We don’t care. It’s going to be hard to fork out our community.”